Last week the governor of Iowa, Terry Branstad, signed a bill which came to him with bipartisan support from the legislature. The measure institutes tax incentives designed to accelerate the growth of the emerging biotech industry that turns crop- and animal-derived feed-stocks into high value, “building block” chemicals. These are climate friendly replacements for chemicals historically derived from oil or natural gas, and they can be used to make everything from plastics to textiles to specialty lubricants to paints and inks to pharmaceuticals. The law was carefully crafted to specifically reward new product development beyond food and fuel, and to provide a larger tax break for new entities while still encouraging innovation by existing players. Governor Branstad told me that his confidence in this kind of business stimulus reflects positive experience from similar programs during his first stint as governor (1983 to 1999).
Iowa has many attributes which combine to make the state a particularly conducive environment for the manufacture of bio-based chemicals. The state’s crop yields are particularly high because of its deep, rich soils and favorable balance of rain and sunshine. The state also benefits from extensive, long-term investment in the industries needed to move, collect and process the crops to be used as animal feeds or for food ingredients (grain elevators, crushing facilities, wet and dry mills…). In recent decades there has also been substantial investment in facilities for bio-fuel production (43 plants for producing 27% of US ethanol, and 12 plants producing 16% of US biodiesel). Companies wanting to invest in new, bio-based chemical facilities in Iowa can take advantage of the abundant feedstock supply, as well as the utilities and other supportive infrastructure. They can also tap into the extensive base of expertise that has developed in Iowa’s companies, venture firms, and academic institutions.
Iowa’s Universities are central to this vision. The Center for Biocatalysis and Bioprocessing at the University of Iowa is a major center for research in these fields. The bill signing ceremony was at the Sukup Atrium in the Biorenewables Complex on Iowa State University’s Campus. ISU has an NSF-funded Center for Biorenewable Chemicals (CBiRC). That center’s director, Dr. Brent Shanks, explained to me that the enrollment at ISU has grown in recent years from 27 to 36 thousand students, and that many of those students study Biological and Chemical Engineering or Agronomy. Both Iowa State and the University of Iowa are providing companies with a healthy supply of home-grown talent. However, with a critical mass of potential employers, a reasonable cost of living, and growing communities of young professionals, Iowa is also an attractive option for those trained elsewhere.
What the politicians and industry leaders hope is that with the added help from these incentives, the state will move towards a critical mass and become for bio-based products, the equivalent of “Silicon Valley” became for digital technologies. There are many other states which stand to benefit from the emerging bio-materials trend.
Of course strengthening and diversifying the sectors that rely on crop output is a positive thing for Midwestern farmers. Having more categories of downstream customers helps to stabilize commodity prices; although it cannot fully insulate from something as extreme as the recent drop in oil prices that has hit the biofuel sector.
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